Young people during their first year of professional activity earn income exempt from IRS.
2025/02/15
Tax Exemption for Workers in the Initial Phase
Workers registered with the “Start‑UP Portugal” program benefit from a tax exemption on 100% of the income obtained during the first year of their professional activity.
Earned Income Exemption for Young People
Young people during their first year of professional activity earn income exempt from IRS.
Total Annual Taxable Income Limits
- Equal to or less than the upper limit of the 4th tax bracket (€10,732 to €20,322).
- Between 18 and 28 years old.
- Have completed at least 4 years of qualified secondary education or hold a level 3 or 4 national vocational training certification (with a 6‑month internship).
Exemption Percentages Capped by Income
- First year: 50% exemption capped at €29,248.
- Second year: 20% exemption capped at €19,068.
IRS 3‑Year Regime (10% on Capped Income)
- 10% flat rate on the capped income (€10,970).
3‑Year Perspective on the Regime with the 2022 State Budget
The 2022 State Budget proposes to include self‑employed workers and make the regime more flexible by:
- New structure: 1st year 30% (limit €21,870).
- Eliminating the monthly income limit of €1,500.
- Allowing graduates at level 8 (under 30 years old) to apply.
- Long‑term research does not exceed 28 years.
Tânia Franco | [email protected]
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